BILL NUMBER: SB 173 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 6, 2003
AMENDED IN SENATE APRIL 22, 2003
AMENDED IN SENATE APRIL 3, 2003
INTRODUCED BY Senator Dunn
FEBRUARY 12, 2003
An act to add Section 17206.7 to the Business and Professions
Code, and to add Section 391.1 to the Public Utilities Code, relating
to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 173, as amended, Dunn. Energy.
(1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations, and authorizes the commission to fix just and
reasonable rates and charges. Existing law provides for a short-run
avoided cost methodology for the price paid by a public utility
electrical corporation for electricity generated by a nonutility,
qualifying small power production or qualifying cogeneration facility
(QF), as defined. This methodology includes adjustments to prices
based upon gas index prices.
This bill would restrict the commission to the use of gas price
indexes determined by the commission to be reliable and verified, and
meeting listed requirements, and would require the commission to
establish standards for reliability and verification for gas price
indexes used to establish or adjust prices paid to QFs by a public
utility electrical corporation. The bill would also restrict the
commission, if it establishes a price benchmark used to determine the
reasonability of utility natural gas purchases for the purpose of
determining a utility bonus payment, to the use of index prices that
meet those listed requirements. The bill would further provide that
if the commission determines that no reliable and verifiable gas
price index exists meeting the standards adopted by the commission,
the commission is required to establish and adjust the prices paid to
QFs by a public utility electrical corporation in a manner that is
just and reasonable, in the public interest, and without
discrimination against nonutility generators, consistent with the
requirements of the federal Public Utility Regulatory Policies Act of
1978.
(2) Existing law prohibits unfair competition, including any
unlawful, unfair, or fraudulent business act or practices. In an
action brought in the name of the people by the Attorney General or
any district attorney, and in specified instances by a county
counsel, city prosecutor, or city attorney, existing law provides
that any person who engages, has engaged, or proposes to engage in
unfair competition, is liable for a civil penalty not to exceed
$2,500 for each violation.
This bill would provide that any person engaging in an
act of unfair competition of making or proposing to make
knowingly making a false statement or report for use in a
gas index price, commits a fraudulent business act constituting
unfair competition and is liable for a civil penalty not to
exceed $25,000 for each violation.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 391.1 is added to the Public Utilities Code, to
read:
391.1. (a) Any gas price index used to establish or adjust prices
for electricity paid to a nonutility generator by a public utility
electrical corporation, pursuant to Section 390, must be reliable and
verified, as determined by the commission.
(b) The commission may determine that a gas price index is
reliable and verified only if the gas price index meets all of the
following characteristics:
(1) All transactions that comprise the gas price index price
calculations are transacted on an organized exchange subject to
regulation by the federal Commodity Futures Trading Commission.
(2) The Commodity Futures Trading Commission requires the
organized exchange to maintain and enforce an internal auditing
mechanism and to maintain records of trading activity for the
transactions, so that a clear audit trail is possible.
(3) The Commodity Futures Trading Commission requires the
organized exchange to conduct market surveillance and trade
surveillance of transactions, with oversight by the Commodity Futures
Trading Commission, to prevent market manipulation and other
anticompetitive activity.
(4) The transactions that comprise the published index price are
reported to the organized exchange and time-stamped within one minute
of the transaction.
(5) The transactions reported to the organized exchange include
all of the following information:
(A) Price.
(B) Volume.
(C) Delivery point.
(D) Duration.
(E) Date and time of transaction.
(F) Whether the transaction is a purchase or a sale.
(G) Counterparty.
(c) If the commission establishes a gas price benchmark, based on
a single gas price index or a combination of gas indexes, and this
benchmark is used to determine the reasonableness of natural gas
purchases by a gas corporation for the purposes of determining a gas
corporation bonus payment shareholder award
, the commission may use only gas index prices that meet the
requirements of subdivision (b).
(d) Notwithstanding Section 390, if the commission determines that
no reliable and verifiable gas price index exists meeting the
standards adopted pursuant to this section, the commission shall
establish and adjust the prices for electricity paid to nonutility
generators by a public utility electrical corporation in a manner
that is just and reasonable, in the public interest, and without
discrimination against nonutility generators, consistent with the
federal Public Utility Regulatory Policies Act of 1978 (Public Law
95-617), any amendments to that act, and the regulations adopted
under that act by the Federal Energy Regulatory Commission.
SEC. 2. Section 17206.7 is added to the Business and Professions
Code, to read:
17206.7. (a) Making Knowingly making
a false statement or report for use in an energy price index is
a fraudulent business act constituting unfair
competition.
(b) Notwithstanding the maximum civil penalty in Section 17206,
any person who makes, has made, or proposes to make
knowingly makes a false statement or report for
use in a gas price index pursuant to Section 390 of the Public
Utilities Code, shall be liable for a civil penalty not to exceed
twenty-five thousand dollars ($25,000) for each violation.
SEC. 3. (a) Subdivision (a) of Section 17206.7 of the Business and
Professions Code does not constitute a change in, but is declaratory
of, existing law.
(b) It is the intention of the Legislature in adding subdivision
(b) of Section 17206.7 of the Business and Professions Code, to
change existing law by providing for civil penalties in an amount
higher than would be available pursuant to Section 17206.